Posts Tagged ‘growth’

Businesses don’t become insular, their leaders do. When leaders are so focused managing “in” their business that they overlook or are increasingly disinterested in the changes taking place around them (clients, markets, products, technology), they’ve made a deadly choice. Defending what they have is a bigger priority than embracing new ideas and new ways to evolve. No surprise then that the “inwards thinking” permeates down to middle managers, who see little or no incentive in promoting experimentation on the front line. Faced with more effective alternatives, clients walk, and the brightest employees walk. By the time, the “alarm bell” is sounded, all too often it is too late, particularly in small businesses.

The Oxford English Dictionary defines “Community”, when used as a mass noun, “the condition of sharing or having certain attitudes and interests in common”. Here is an unpalatable truth for a great many businesses, events and professional associations, who talk about building or nurturing a “community”, they really don’t have one. Why? They never have or no longer possess the right conditions for sharing (reciprocal value) and/or the community members have little in common with each other’s lives. Some falter after a brief life, others struggle on into a mid-life crisis or they reach a natural death. It is incredibly hard to sustain a community and build a powerful brand. Because it is easy start in a low-cost technological age, we shouldn’t kid ourselves it is the smart thing for us to do.

In a recent interview with Forbes contributor, Chris Cancialosi, James touches upon the often hidden price of entrepreneurship, the mental consequences and self-worth issues that bedevil even the most seasoned entrepreneurs, irrespective of the business size.

I get asked by investors about the role of social media in stimulating the profitable growth of mid-market business-to-consumer and business-to-business targets seeking growth capital. My default response is ‘why does someone want to share their video, tweet, blog? Then, how does it help them (entrepreneur) and you (investor) achieve your goals in the next 12 months?’ If you don’t have a compelling answer to that question, it is probably a waste of time and going to have zero impact on the firm’s growth. Review any YouTube, Twitter, Instagram or Facebook listing of most popular videos, tweets, images or blog posts and there is always that one thing that made people share it. That is the secret sauce. The son of one of my old bosses, Sam Tsui, an American songwriter, has had incredible success attracting 2.5 million subscribers to his YouTube channel. Sam is talented (Yale-educated). He possesses a great voice. He has learned to leverage the medium with great effect (singing duets with himself) in order to create a strong brand.

However, sharing alone is insufficient for Sam and the businesses I describe because there is no taste or noise filter, think of profane rants from soccer fans, product disasters and compromising personal photos, dressed up as “comedy” or black humour.

There needs to be a “gravity” pull for your target audience and a reason to keep returning. That requires volume, value and consistent messaging (“VVM”) to create engagement. Paid promotion works to raise “conscious” awareness of your product or service for a millisecond but it does little to stimulate someone to act (subscribe, make the call, visit the store, buy). So long as you put the marketing investment in the appropriate context, there is little to worry about but you must be willing to be intellectually honest about the results.

In a letter to the Editor of the UK’s leading horse racing daily newspaper, Racing Post, James points out that without a “profitable growth” mindset and an investment alternative that reflects it, the industry is accepting certain decline. There is no “plateau”. In this case, The Jockey Club has chosen to sell a profitable business and an iconic racecourse, Kempton Park, for housing development under the smokescreen of further investment in the sport’s “new heritage”. What is really happening is a lack of vision, a lack of bold new ideas and a lack of leadership. Yet that doesn’t have to be the case, if racing’s rulers want to leave a meaningful legacy.

A rocket-propelled growth trajectory creates a “siren call” to investors and garners predictable and less predictable media comment. Executives ride the bandwagon of super valuations (fame, inflated bonuses, celebrity) but all too often the focus on dramatic market expansion and top line growth outpaces risk mitigation initiatives (the boring stuff). Heat melts the shell of the rocket on re-entry and the business becomes highly vulnerable.

This past week, Airbnb came in to sharp focus with me. (1) A European CEO of a “bricks and mortar” global serviced apartment business pointing out that Airbnb is flagrantly allowing its’ hosts in many key European gateway cities to run full-time hospitality businesses (83,000 room listings in Paris) and (2) Personally experiencing their underwhelming response to a cyber hack on my own Airbnb account.

My observation is Airbnb are playing too fast and too loose. They are tripping up on common sense responses to foreseen risks (cyber hacks, hosts flouting local trading rules), not just unforeseen risks. I don’t believe they are alone, there are hundreds of “celebrity” high growth businesses, whose risk mitigation strategies are being lapped by their growth plans.

I am all for disruptive businesses helping raise the levels of customer service. That is capitalism. No business or industry has a “right” to survive. What isn’t acceptable is when a business is acquiescent or adopts approaches (cyber hack) that are so inadequate that trust and integrity is destroyed. Are management asleep while cyber thieves roam freely in their booking system, setting up fake bookings, lifting credit card information, conversing brazenly with hosts and potentially putting “hosts” in physical harm’s way with bogus guests? Are their customers solely responsible for alerting Airbnb to breaches and mitigating the immediate risks (financial theft, loss of personal data, potential physical harm to hosts)? Should this matter to investors?

Yes, if you are an investor for whom reputational risk is equally as important as financial risk.

There are plenty of disruptive businesses (Ryanair), where executives have assailed their competitors, regulators and their customers for years while the growth trajectory dramatically outpaces the risk mitigation strategies.

The difficulty arises when growth slows, investors ask “why”?

Businesses aren’t in existence to be liked, they are in business to be respected. If you don’t believe that look at Apple, GE, Singapore Airlines and Virgin. When respect is destroyed by leaders failing to prioritise managing risk effectively, customers, shareholders, employees and business partners walk. No one individual or brand is insulated from that certainty.

I am at a zoo in the English countryside with my daughter, watching rare breeds of monkeys play and eat. Once they have chewed on the best bits of lettuce they flick them off their perch onto the floor so they can make room for new supplies. They don’t hoard or persist in trying to nibble away at food that has passed its’ “sell by” date or they are bored with.

Yet in many expansive mid-market and larger businesses I see huge amounts of time invested and energy deployed in processes and activities that have long ceased to be effective. Managers lack sufficient focus, organisation, and the volition to make “tough calls” on what to abandon.

The consequence is that they are becoming less productive, they are self-limiting their value to their clients and the organisation’s growth potential.

Assuming there is no “spare capacity” in your business, in order to ascend to the next level of growth:

What exactly are you going to stop doing or do less of this month and the month thereafter?

When are going to schedule the time and where are you going to implement that?

How will you measure progress and success?

Who must be held personally accountable to ensure your goal is met?

In my own business, I have consciously made a decision to abandon working for owners of startups and early stage businesses unless they past a stringent “smell test”. I will only offer strategic advice on dramatic growth opportunitiest to investors with substantial means and managers of businesses with upwards of £50M enterprise value from 1st September. I plan to keep a bi-weekly calendar. Account for the time saved (emails not read, calls not scheduled, meetings not set, and follow up not required) in rejecting the offers and the increased productivity earned.

I currently receive 3+ requests a week from entrepreneurs and small business owners, particularly seeking help attracting growth capital. They have an unquenchable appetite for advice but by and large, a poverty mentality in paying for it and investing in their own performance. Sorry I need to better invest my time if I am to be more valuable to clients, who want to go where I want to go.

If monkeys can make that simple determination without fear, why cannot intelligent managers and ambitious organisations?

Countless businesses today are being thrown miles off course in accomplishing their profitable growth goals (banks, financial services, insurance, gaming, healthcare, energy and so forth) largely because of their own inadequacies. They are like the pilot who hits turbulence at 30,000 feet, loses their bearings and temporarily or permanently is sent into a tailspin. If you are going to fly, you accept there is a high probability of turbulence. If you are providing essential products, services and relationships in society today, expect to be held to account for your standards and behaviour. Stop moaning.

Leaders have two options: embrace or resist regulation. Then adjust the speed, direction and ascent of the profitable growth plans to accommodate the proposed changes. Here is what sets apart my very best clients:

Positive Regulatory Mindset. Business leaders, who maintain a perspective that says “there are abundant opportunities in front of us, we didn’t wish the regulation but we will learn to live with it”, empirical evidence suggests dramatically outperform others. Change is a constant and our futures are about embracing change (biotech, pharma). Contrast this with those business leaders, who only see fear, limited opportunities on the horizon, vent loudly at the negative consequences and create Domesday predictions (airlines, agriculture, bookmakers). Change is a threat to their cosy status quo and they do their level best to resist it until such that they wearily accept it or fold their cards.

Impressive Regulatory Engagement. Seek to be on the front foot with regulators, actively maintain a presence in the regulatory dialogue within the industry, take positions on regulatory boards and consumer watchdogs.

Superb Regulatory Antennae. Most regulation is reactive to events, changes in consumer perception, media perception and political perceptions. Rarely can you accurately predict the timing but you can sense the shifting of opinions and the force fields (changes in critical factors ‘+’, ‘-‘ or ‘neutral’) that create the momentum for change.

Rapidly Mine Regulatory Motives. Behind every regulation lies an emotional imperative. Understand why a powerful voice(s) at the regulator or consumer body discernibly sees their self-interests best served in implementing the new policies and procedures, in the proposed time frame and manner (increased power, greater influence, greater control, greater political influence, greater credibility and so forth).

Quantify Regulatory Value. “Value” in the form of tangible, intangible and peripheral benefits that arise from regulation (although sometimes they may be hard to discern) and the investment required to enact it. Tangible benefits over a defined time period (clawing back funds over trading or market abuse scandals). Intangible benefits and the breadth of scope (bankers behavioural changes and sweeping industrywide cultural changes to treating their customers fairly). Peripheral benefits (structural market changes such as the Dodd Frank Financial Regulatory Reform Bill and the impact on proprietary trading businesses in investment banks). Lawmakers and regulators are typically prudent risk takers, smart business leaders are keenly attuned to how they weigh up the risks and rewards (personal and professional) and act.

Anticipate Regulatory Opportunity. Outstanding businesses have a regulatory radar system (Corporate Affairs) embedded into the upper and mid-level line management tiers that excels at alerting them to: Why there is a need for regulation? (public sentiment) Why now? (window of opportunity) Why on the basis proposed? (tried and failed with other legislative tools)

Acute Sense of Regulatory Timing. Can you identify the priority that is driving the need to enact the regulation (political fall out, media outcry, changes in public opinion etc)? Timing is about regulators and lawmakers priorities. Stuff gets done because they need to be seen to be doing something (seriousness, urgency and gravity behind the issue). Inevitably, it is almost overpowering, ill-conceived and often off target but that is not the point. Lawmakers and regulators can show they acted. Don’t blame us.

Large or small businesses, the dynamics are largely the same but the consequences are often dramatically different. How many of these skills, traits and expertise do you Managers possess today? What do your profitable growth plans demand that you possess in future in order arrive safely at your desired destination? How do you best upgrade your regulatory response toolkit and when?

I am excited to be asked to moderate a panel session titled, “Constructing a Long-Term Game Plan for Operating Partners” at next month’s pre-eminent European private equity event.

If you want to meet, network and leave with powerful industry insights to guide your future, you should really consider Private Equity International’s Operating Partners Forum: Europe. The event runs from Tuesday, 19th to Wednesday. 20th April, 2016. It is held at the Institute of Directors in London.

While there is an obvious appeal to those immersed in the sector, I have observed that there is huge value to be gained for top management in corporate organisations highly curious about a closer personal or professional relationship with General Partners in private equity firms, Limited Partners, Operating Partners and Consultants. Specifically, those people who are confident that their personal skills, behavioural traits and expertise could deliver impressive value and results to attendees, today (buyout, minority investor, expertise etc) or at a future date in their career (NED, Operating Partner etc)

I’ll be hosting a breakfast on Tuesday, 19th for the first 5 attendees who would like to join me in close proximity to the event. Please email if you are interested in joining me james@elliceconsulting.com Details to follow.

If you would like to meet in person at the event, please email or call me at +44 203 440 5072.

For those unable to attend, I will be circulating a 1-2 page snapshot of key learning points. If you would appreciate reading this, email me to be added to the circulation list.

Here is today’s press release:

Berkeley to Discuss Constructing a Long-Term Game Plan for Operating Partners

London, England— 1st March, 2016

James Berkeley, Managing Director of ELLICE CONSULTING LIMITED will be moderating a panel discussion on the role, credibility and the future of Operating Partners in the value creation process. The panel session is scheduled for Tuesday, 19th April, 2016 and will be held at the Institute of Directors in London. Private Equity International’s annual Operating Partners Forum has become the premier event for anyone involved with value creation in the European private equity community.

“The contribution of Operating Partners in creating value has never been higher, yet the views about their worth has never been more polarised”, notes Berkeley, an expert in the profitable growth and expansion of private equity-backed portfolio companies. “The future for Operating Partners is about “FAST”. Formidable skills, expertise and behavioural traits. Absolute credibility with key constituents. Seductive rapport with top managers and sponsors. Tremendous return on investment. The good news, it has never been easier for Operating Partners to stand out from the crowd so long as they possess the requisite competencies and passion.”

Berkeley notes, “A long-term game plan presumes that all parties have absolute clarity about the objectives and they are quickly able to decipher the shortest route to that destination. It is no longer acceptable for top management to spend 6 months formulating strategy when it can be done in 6 hours. Hence the real value of an Operating Partner is increasingly as a catalyst for speed not just the quality of decision-making, at the portfolio company level. That places a huge emphasis on an Operating Partner’s behavioural skills in both the formulation and implementation stages of a growth strategy.”

James Berkeley helps Sponsors and top management seeking dramatic growth opportunities. He has worked extensively with private equity firms and portfolio company managers globally to achieve unprecedented top line growth, market-leading margin expansion and impressive value creation through his distinctive approaches to marketing, leveraging relationships, branding and pricing.

Whether it is consulting Sponsors and top management on profitable growth issues, critiquing value creation plans, changing pricing strategies or an enhanced focused on talent in high-performing organisations, he is known for his Profitable Growth Regime.

James’s counsel has been sort by senior executives at an array of private equity-owned businesses such as Hilton Worldwide, ASIMCO Technologies, Caesars Entertainment, CKE Restaurants and over 40 other market-leading organisations around the world.

At a cocktail party earlier in the week at the London home of a major art buyer and industrialist, I asked where his passion for art started. Surrounded by some fabulous pieces of art hanging from the walls, I presumed I was going to hear how art had been a part of his life from an early age or when building his fortune and how he had acquired an “eye” for great art.

His response was was far more direct – a chance adventure around a neighbour’s home in St Tropez just 15 years ago (he is in his late 70’s) and the fact that art appreciates in value.

When you articulate your brand, do you spend hours trying to concoct a fanciful and complex story to about the perceived value or do you tell it as it is? Do your clients or customers come looking for a deep and meaningful story when their needs are often best met by a short and direct response?

My observation with many businesses looking to enter new markets is that they incorrectly presume that the “worth” of their brand and its’ differentiation, is wound up in an elaborate story about why they chose the market (geographic or product) and their “unique” methodology. Stories are only good if they are memorable. Motives don’t have to sophisticated or highly intellectual. The only story that matters is how the other party is better off or personally better supported (value and results).